Equipment Finance Execs Report Higher Volume; Confidence Eases
The new business volume for financing or leasing equipment is up 1 percent in May 2015 compared to last year, though down 13 percent from April's numbers, according to the Equipment Leasing and Finance Association. Year to date, cumulative new business volume increased 10 percent compared to 2014.
Separately, the organization's monthly confidence index, slipped to 63.0 from May's index of 67.5. The confidence index reflects prevailing business conditions and expectations for the future as reported by key executives from the $903 billion equipment finance sector. They were responding to a survey asking about current business conditions and expected product demand and other factors. More than 80 percent said business conditions would remain unchanged over the next four months. However, fewer of the execs felt equipment demand would increase, with more projecting that equipment demand would flatten.
ELFA President and CEO William G. Sutton, CAE, said: “New business volume continues to hold its own in the equipment finance sector, despite the modest April to May decline. Although members report strong activity in certain markets, some business owners continue to take a wait-and-see attitude before investing in new plant and equipment, as the Fed considers when to tighten monetary policy, which will lead to higher interest rates. Nevertheless, a double-digit increase in cumulative new business volume for the year is indicative of the sector’s strength. Portfolios continue to perform well and member companies appear to be in a hiring mode, as headcount is up for the month.”
Andrew Bender, CEO, GSG Financial LLC, said, “MLFI-25 new business volume suggests continued growth for the equipment leasing and finance industry. Charge offs and delinquency remain at historic lows and hiring in 2015 has been robust. Industry players are bullish and competition will remain tough, but these are all positive indicators as end users plan for year-end capital acquisitions. Things could get interesting if the Fed impacts buying behavior across rate-sensitive sectors or if Congress extends bonus depreciation or enacts other tax reform. With an eye on global economic disruptions, I am optimistic, but cautious.”
For more information, please visit www.elfaonline.org. Find more on the leasing and finance index here, and the confidence index here.
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